Dated: May 30 2022

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As a homeowner, there’s a good chance that your next move will have you straddled with two major decisions at one time: selling your current home and buying a new one.

It’s a process that requires some thought and planning in the best of circumstances. But with housing inventories so low these last few years, the competition among buyers has been fierce in many markets — perhaps making the process seem even more daunting.

If you’re in this situation (or think you will be soon), know you aren’t alone: 51% of all buyers in 2021 owned their previous home, and 53% said finding the right property was the most difficult step of the homebuying process.

Here are the four primary options available to you when it comes time to buy a house that is contingent on selling yours.

What is a home sale contingency?

In real estate, a “contingency” refers to certain circumstances that must be met before a home sale can be finalized. For instance, a property might go under contract with a house inspection or financing contingency. This means that if a significant structural issue is found during the inspection, or the buyer’s financing falls through, they’ll be able to terminate the contract without penalty.

In the case of a home sale contingency, the buyer will be under no obligation to follow through with the purchase of the new house unless their home sells.

These contingencies are typically good for one or two months: giving buyers a set amount of time to put their current house on the market and find a buyer. If their home fails to sell during this timeframe, the contract can be terminated.

There are two different types of home sale contingencies:

  • home settlement contingency is used when the buyer’s home is already under contract, the home inspection is complete and the transaction is moving toward a closing date. Because there are fewer roadblocks in this scenario, it’s typically a more attractive option for sellers.
  • sale and settlement contingency is used when the buyer’s home isn’t yet under contract and they’re still actively marketing the property. Because there are no guarantees that the house will sell quickly (even in the current real estate climate), this clause isn’t as appealing to motivated sellers.
A pen used to buy a house contingent on selling yours.

How does a home sale contingency work?

If you fall in love with a home prior to selling yours, your real estate agent can add a contingency clause to the terms of the offer. This clause will protect you from moving forward with the purchase before your current home sells, and can go one of three ways:

  1. You find a buyer for your home and your contract for the new home moves forward as planned.
  2. You don’t find a home buyer in the specified timeframe (usually 30-60 days) and the contract for buying the new home is voided. When this happens, you typically will get back any earnest money you put down on the house and will be able to start the search over again.
  3. In the event of a “kick-out clause,” another buyer makes an offer on the home that the seller is interested in accepting. According to R.C. Shea and Associates, a kick-out clause is an addendum that gives sellers the ability to keep their home on the market while you try to sell your house. If they find a new buyer, they’ll give you 72 hours (on average) to either move forward with the home purchase or drop out.

How common is a home sale contingency?

With just over half of all buyers owning their previous residences, the process of buying a house that is contingent on selling yours is an everyday obstacle for buyers, sellers, and their agents. And yet, with only 5% of contracts terminated due to contingency issues in 2021, it’s certainly not an obstacle that is insurmountable — especially with a little planning and an experienced real estate agent by your side.

scenario d how to buy contingent on selling

4 ways to buy a house contingent on selling yours

How you move forward in the process will depend on where you are now. 

Scenario A: Your home is under contract and you’re looking for your next dream home

With moving day imminent, your focus is two-fold: make sure your home is packed and ready to go before the closing date.

Scenario B: Your home is on the market and you’re looking for your next dream home

The good news? It’s a seller’s market. The bad news? It’s a seller’s market. So while you’re in a good position to sell your current home, you might find yourself in a tough position when looking to buy another one.

The inventory of available homes hasn’t yet bounced back to its pre-pandemic levels, which was slashed by 37.8% between December 2019 and December 2021. And while inventory is expected to rise slightly this year, it likely won’t outpace the number of interested buyers entering the market.

This strong demand for housing combined with record-low inventory means that you’ll be in a good position to sell your current home. According to the National Association of Realtors, in 2021, the average home only stayed on the market for a week before going under contract at 100% of selling price.

On the flip side, you’ll likely face stiff competition when looking for a new home to buy. With sellers getting multiple offers, you’ll need to create an offer with attractive terms that will stand out from the masses. Having an experienced real estate agent on your side who can help with this process will be key.

Navigating the buying and selling processes at the same time can be overwhelming, as your focus will be split in two very different directions. Unless luck is on your side, it’s also very likely that one process will be completed before the other.

If your home goes under contract first, go back to Scenario A

If you find your new home first, proceed to Scenario C. 

Scenario C: You home is one the market and you’ve found your next dream home

In this scenario, you have to focus on both selling your current home while at the same time preparing the best offer for your next home.

As we previously mentioned, it’s a seller’s market, which should work in your favor and (hopefully) lead to a quick sale. To ensure the fastest sale possible, you won’t want to put any obstacles between your home and potential buyers.


  • Use a top agent’s advice to price the house for the market. Ask them to show you comparable home sales in the area over the last few months for houses that are similar in size and features to yours. A comparative market analysis (CMA) will help you better understand how to price your home based on the current real estate market.
  • Make all repairs that might create buyer hesitation. The biggest things to assess are health and safety issues such as the structural condition of the house, the existence of harmful substances such as mold or asbestos and anything not up to code. Using a home inspector can be helpful with this process.
  • Don’t skimp on staging. According to the National Association of Realtors, 82% of buyers’ agents said that staging a home made it easier for their clients to visualize themselves living there. When completed by the sellers’ agent, staging cost an average of $300 — money that may be recouped at the time of sale. In fact, 23% of buyers’ agents said that a staged home increased the selling price by 1% to 5%.
  • Use only the highest quality images for the online listing. With 97% of home buyers using the Internet to search for available properties, hiring a real estate photographer to take professional shots of your property can be a worthwhile investment. A 360-degree virtual walkthrough or video tour can help your property stand out, as well.
  • Prepare to move quickly. Through the process of staging the home, all of your personal effects should already be packed away. To make the process of moving out (and into your new home) as easy as possible, transfer all of those boxes to the basement, attic or a storage facility while your home is on the market.

Now it’s time to focus on that offer for the new house.

An inventory shortage is driving up interest and has led to bidding wars for available homes. Competition is inevitable, and not something you can control. What you can control is making your offer as attractive as possible.

Here’s a few tips that can help:

  • Offer a higher price than your competitor. In 2021, the average home sold for 100% of the listing price. Expect multiple offers and work with your agent to provide the most attractive offer possible.
  • Let the seller stay a while longer. According to Peters, there are offer terms that can mean more than money. “Terms that would be interesting to me, would be if a buyer was willing to give the seller possession after the close,” he said. “In other words, the seller has a week or two to get out of the house, when they’re living rent free.”
  • Consider using a bridge loan. Rather than relying on the sale of your home to fund your new purchase, this short-term solution can be taken out against your current home until a buyer is found.
  • Include your current home’s list price with the offer. If you’ve priced your home appropriately (or aggressively), this shows the sellers you’re serious about selling your home.
  • Make it personal. Never underestimate the power of sentimentality, even in a business transaction, as Peters showed in Scenario A. With this in mind, include a handwritten, personal note about what makes this property a dream home for you and your family.

Together, this combination of strategies for selling your current home, while making an offer on your next home, will put you on the best path for achieving success.

Scenario D: Your home isn’t on the market, but you’ve found your next dream home

Simply put: get your home on the market.

According to the Realtors Confidence Index, houses were on the market for an average of 19 days in 2021. Though that’s a relatively short period of time — it’s a sellers’ market after all — it’s still cutting it very close after getting an offer accepted to make the necessary repairs and cosmetic changes to the house, list it, accept showings, review offers, go under contract and close. You run the high risk that your contingent offer will expire or the sellers find another buyer.

That’s even if a seller would take the gamble of accepting the huge risk of a contingent offer from a buyer whose home isn’t listed yet. Peters, for one, would not.

“If you had somebody come to the table and their house isn’t even listed and they want to buy a listing, I am very trigger shy to do that,” he said. “They have to show some motivation that they’re on the market and they’re making a conscious effort.”

When you’re ready to put your home on the market, proceed to Scenario C. 

A decoration in a home of a house that was sold.

Bottom line? Rely on a top agent’s expertise to guide your journey

The process of buying or selling a home can be challenging enough — but when trying to do both at the same time, getting it right can seem downright daunting. Especially in today’s competitive market, having a top real estate agent on your side will be critical to navigating the twists and turns of any home sale contingency scenario.

Whatever path you currently find yourself on, your next step in your adventure should be to consult with a real estate agent in your area who can guide you through the process. 

Source HomeLight

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Cynthia Chugg

Cynthia Chugg has been a long-time resident of the Magic Valley; born and raised here, and is so excited to be turning her community focus towards real estate. With a passion for service, Cynthia is r....

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